The commercial service robot industry has been developing in China for nearly ten years, and currently it mainly focuses on three types of markets: hotel distribution, catering distribution, and commercial cleaning. This article will mainly discuss the development trend and investment opportunities of commercial service robots in the cleaning field.
Core Point
The smart cleaning market has a large space, and the current market size is still small, and it will be enough to accommodate several companies in the future. In the future, the market structure will not be dominated by one company, but will be coexisted by several companies, and the shipment volume can be maintained at the order of 1,000 units;
The customer’s purchasing decision, product power is the first, that is, to obtain products that can be practically implemented and can provide convenient cleaning services for cleaning personnel. The second is price and convenient maintenance services, which is also the reason why a large number of channel providers can survive for a long time. Channel providers respond quickly to localization and maintain a good relationship with customers for a long time;
A typical difference between the 2B market and the 2C market is that the decision-making in the 2B market is more rational, and the competition among several companies is more important.
One of the core competitiveness of intelligent cleaning robots is the understanding of the cleaning field, which is the core ability to support the batch and continuous shipment of products. It is not difficult for startups to ship their products in a short period of time. However, if they do not understand the cleaning field in place, it will be difficult to keep up with subsequent services, which will eventually lead to unsustainable batch shipments.
01. Market overview
The commercial cleaning industry is the main branch of the cleaning industry, which refers to the general term for industries that provide cleaning tools, products and services for public commercial places such as office buildings, shopping malls, hotels, restaurants, etc., in addition to industrial cleaning and civil cleaning. The main function of commercial cleaning robots is to replace manual commercial cleaning work.
Market space
At present, there are about 100,000 cleaning companies in China, about 10 million cleaning employees, and a per capita annual service fee of 60,000. It is roughly estimated that there is a market space of nearly trillions. If cleaning robots can replace 10% to 15% of manpower, the market space can reach nearly 100 billion.
Market size
The commercial cleaning market has a large market space, but at this stage, commercial cleaning robots have not been widely implemented, and the industry penetration rate is still very low.
According to the calculation of Yiou Think Tank, in 2020, the market size of China’s commercial cleaning robot will be 5.81 billion yuan, a year-on-year increase of 120.0%. By 2025, the market size will reach RMB 74.91 billion.
Commercial cleaning industry growth logic
With the development of society and the corresponding growth of public space, especially after the new crown epidemic, people’s standards for cleanliness and hygiene are improving, the aging of the population has led to a reduction in the labor force, and the blue-collar labor force has decreased, and young people are reluctant to engage in this industry. The quality of personnel in the industry is low, the mobility is high, and management is difficult. These social problems directly catalyze the growth of demand for robotic equipment.
02. Development history of commercial cleaning robots
The field of commercial cleaning has been a labor-intensive field for many years. Areas such as residences, commercial properties, and urban public spaces were first cleaned entirely manually. Since 2010, foreign traditional cleaning equipment manufacturers have gradually entered the domestic market, such as large-scale manual driving floor scrubbers, small and medium-sized hand-held traditional cleaning equipment, etc. Have gradually become popular in the domestic market. After years of development, traditional cleaning equipment in China There is already a fairly high penetration rate, and manually driven floor scrubbers can be seen everywhere in shopping malls, transportation hubs and other places. At the same time, since traditional cleaning equipment has not been freed from the shackles of manpower, although it has greatly improved work efficiency, the proportion of labor costs in the cleaning field is still very high (more than 80% according to statistics). The industry urgently needs smarter devices to free up manpower.
In recent years, more and more intelligent cleaning robots have begun to emerge. The core of this type of cleaning robot is low-speed unmanned autonomous driving. It combines unmanned and cleaning functions to fundamentally solve the problem of high labor costs.
03. Competitive landscape of commercial cleaning market
In the commercial cleaning market, there are mainly two types of players: traditional professional cleaning equipment manufacturers and new-generation smart cleaning equipment startups. In the field of professional cleaning, there are many traditional manufacturers that have been operating for decades or even hundreds of years. For example, Kärcher and Diversey have developed robot products through cooperation or self-research.
In addition, Avidbot (Canada) among the startups is currently the most widely used professional cleaning robot product in the world. The market structure of China’s commercial cleaning industry is very fragmented, and it is an extremely fragmented and fragmented market. Well-known companies such as Kärcher rank first in domestic shipments, but they only account for 7% of the market share in the long run, and the market share is the second The second is Yangzi Group, with a market share of about 5%.
Traditional cleaning equipment manufacturers
Founded in 1935, Kärcher (Kärcher) is a global leader in the cleaning field, with over 3,000 products sold in hundreds of countries and regions around the world, with 50,000 service outlets. The annual sales amount to 2.8 billion euros, and the annual sales in China are in the scale of 3 billion yuan.
Yangzi Industry is a well-known clean brand in China. Since 1980, it has learned German technology, and has developed and produced cleaning equipment according to German standards. The cleaning equipment series products have been exported to more than 100 countries and regions. The cumulative sales volume of equipment is 460,000 units, and there are more than 150,000 customers. .
Hako is well-known in the global cleaning field, with an annual revenue of nearly one billion US dollars. The main application scenarios of its products are municipal sanitation and urban cleaning. The product quality is excellent. Its disadvantage is that it is expensive. Universal Studios Beijing purchased its products.
Compared with Hago, Kärcher is more based on volume and sells multiple product lines at low prices. Its dealer network is mature, and the price of its products is relatively close to the people abroad, but the price is still a premium product for domestic customers.
Other equipment manufacturers, such as Tennant, Nilfisk, etc., are also quite expensive, and their global sales are considerable. Currently, they are shipped in the domestic high-end market. However, the shipment volume is not high, and the high price is a hindrance.
At the same time, China’s commercial cleaning market has a large number of small brands/white-brand companies with annual sales of less than 100 million yuan. The localization is serious. While selling cleaning equipment, we also provide equipment operation and maintenance services.
Smart Cleaning Equipment Startup
Founded in 2013, Gaoxian Robotics mainly focuses on the research and development and sales of cleaning robots. It is the first company in the industry to provide SLAM solutions. Its main products are low-speed unmanned commercial sweepers/scrubbers. At present, Gaoxian has landed more than 1,000 projects in more than 30 countries and regions around the world, and its share in property real estate has reached 80%. Top real estate and retail customers have achieved repurchase, and their benchmark customers include: Shanghai Xingye Taikoo Hui, Pudong Century Plaza, Alipay Shanghai Headquarters, Nanxiang Infinity City, etc.
From the perspective of shipments, the domestic market is currently in the field of intelligent cleaning robots, and Gaoxian Robot is an absolute leading company.
In September 2021, Gaoxian Robot completed nearly 1 billion yuan in Series C financing, led by softbank Vision Fund and Capital Today, with a post-investment valuation of 8.8 billion yuan. The leading investment institutions in the market are still willing to invest such a large amount at this high valuation at this point, which also confirms from the side that the slope of the cleaning service track is long and snowy, and the game is far from over.
With the education of Gaoxian Robot on the market, more and more teams have begun to enter the market. In the past two years, many new start-up companies have launched smart cleaning products and received investment from venture capital institutions, such as Shanghai Tangen Intelligent, Suzhou Pattner et al.
The high ceiling of the cleaning market and the low penetration rate of commercial cleaning robots at this stage mean that this track still has great opportunities for startups and investment institutions. The market in the field of intelligent cleaning is a big track of hundreds of billions. Although Gaoxian Robot has a high market share, the market is far from being crowded, and excellent startups still have the opportunity to emerge.
04. Business model analysis
Distribution model
In the distribution network of traditional cleaning equipment manufacturers, the gross profit margin of each link is basically between 10% and 25%. Taking the hand-held dust pusher with the highest shipment volume of Kach as an example, the dealer’s price is about 9,000 yuan, and the terminal price is 12,000 yuan. Without considering the second-level dealer, the gross profit rate is about to 25%.
At this stage, the terminal price of smart cleaning equipment on the market is basically 150,000-200,000 yuan. If the BOM cost of the product can be less than 50,000 yuan, it can leave enough gross profit for all channels in the entire distribution process, so that the distribution Mode is more stable.
Direct sales model
The advantage of direct selling is that it can directly reach end customers and enjoy high gross profit. The disadvantage is that it takes a huge amount of money to establish a direct selling system from scratch, and it is difficult to achieve profitability before large-scale shipments. The establishment of a product sales system is a very slow and difficult process.
At the same time, there are many vertical fields in the commercial cleaning market, such as shopping centers, logistics warehouses, hospitals, schools, factories, and channel resources in various fields cannot be reused. This is why the commercial cleaning market has always been decentralized and localized for many years. , the efficiency of self-built direct selling system is low.
The advantages of the direct selling system can be brought into play only in the case of large-scale shipments, which can stabilize end customers and enjoy higher gross profit margins. And this is a huge challenge for startups.
ODM mode
Provide intelligent cleaning machines to traditional cleaning equipment manufacturers (such as Kärcher, Yangzi, Hyde, etc.) In the form of ODM, and use their distribution system to achieve rapid mass shipments.
Traditional cleaning equipment manufacturers have established a strict and complete distribution system. Taking Kärcher as an example, it has more than 500 dealers in mainland China. There are nearly 100 personnel at every turn, and the time limit for after-sales response to end customers is strictly controlled within 24 hours. The establishment of this type of system is similar to the 4S shop system of automobiles, which is mature and stubborn.
05. Development strategy of intelligent cleaning robot
The research and development difficulties of intelligent cleaning robots are mainly in two aspects: cleaning know-how and automatic control. For most startup companies, cleaning know-how is a shortcoming that is not easy to fill.
There are two hurdles for hardware products of automatic control. One is the research and development of products 0-1, which requires a lot of capital and talent investment, and the other is the mass production of 1-10, which requires the strong cooperation of the supply chain and sales channels, and the batch of products. In the case of shipment, the reliability of the product can be polished, and the cost of the product can be greatly reduced at the same time.
Gaoxian Robot started from automatic control. In recent years, it has received huge capital support and has enough strength to build its own channels for shipment, trial and error, and accumulate know-how in the cleaning industry. At this stage, limited by the overall investment and financing environment of the primary market, talents and funds are also concentrated in leading companies. If there is no sufficient financial support for start-up companies, it will be very difficult to start from scratch in the cleaning industry.
If you choose to cooperate with traditional equipment manufacturers/agents in the early stage of development to supply their oems and use their mature distribution channels, it will be an opportunity for smart cleaning robot startups to achieve mass shipments in the early stage, but at the same time, the risk lies in the As for the stable cooperative relationship of agents, from the perspective of market experience, the most reliable relationship is the equity investment relationship, that is, if the equipment manufacturers and end customers can obtain equity participation, the development will be relatively smooth.
06. Industry status from the perspective of investment institutions
End customers still tend to cooperate with equipment vendors and channel vendors with whom they have cooperated for a long time. Long-term and stable cooperative relationships and real-time responsive after-sales service are the focus of customers’ concerns, and it is also one of the main reasons why it is difficult for startups to win new customers.
End customers need a complete cleaning solution, not just one cleaning device. What it needs is a washing machine with an intelligent navigation system, not a robot with a washing function.
At present, domestic technology-based start-up companies still have a relatively shallow understanding of the cleaning industry. At present, many start-ups have achieved breakthroughs in product 0-1, but there is still a long way to go before mass commercial shipments. Product shipment is a cleaning product tool, and there is still a lot of steps to be overcome.
Smart cleaning equipment will compete more in price and service in the future. Product power is the first, followed by price and service.
As long as 2C products meet certain selling points, and then marketing through online and offline channels, you can get considerable shipments in a short period of time, and there is not much pressure on after-sales. You only need to ensure the pass rate of the product, not too much. You can return it. However, 2B’s products will be a very huge business chain from the early customer demand to the later maintenance, maintenance, after-sales, and even leasing business models, which require particularly high operating capabilities for the entire company.
The smart cleaning market has a lot of space. The current market size is still small, and the market potential is huge. It will be enough to accommodate several companies in the future. In the future, the market structure will not be dominated by one company, but several companies will coexist, and the shipment volume can be maintained at the order of 1,000 units.
Product power comes first in customer purchasing decisions, that is, the ability to obtain practical products that can provide convenient cleaning services for cleaning personnel, followed by price and convenient maintenance services. This is also the reason why a large number of channel providers can survive for a long time. The localization of channel merchants responds quickly and maintains a good relationship with customers for a long time.
A typical difference between the 2B market and the 2C market is that in the 2B market, decision-making is slow, and the competition among several companies is more important. Participation is through bidding. Therefore, the 2B market will not be a one-size-fits-all market, and several companies will run out at the same time.
One of the core competencies of intelligent cleaning robots is the understanding of the cleaning field, which is the core ability to support products that can be shipped in batches and continuously. It is not difficult for the products of startups to ship in the short term, but if the cleaning field is not well understood, it will be difficult to keep up with the subsequent services, which will eventually lead to unsustainable shipments.
07. Industry development trends
In the long run, the general direction of machines replacing manpower is certain, especially in the field of commercial cleaning. The average age of the existing employees in the commercial cleaning field has reached 60 years old, and their physical functions are not suitable for manual labor. The property owners continue to employ senior employees, which also poses considerable risks to themselves.
The field of robotics is expected to do more than just cleaning the ground. At present, robots in the cleaning field are essentially large sweepers and washing machines. However, the demand in the commercial cleaning field is 3D three-dimensional. The cleaning and sterilization, escalator cleaning, facade cleaning, toilet cleaning, etc. Everywhere in the space are replaced by machines. Human needs are relatively strong, and these are also blue oceans that robot startups have not yet set foot in.
